Investors have dumped shares in Cleanaway Waste Management (ASX: CWY) despite significant boosts to profits and its final dividend.
Shares in the Melbourne-based company dropped 10.5 per cent to $2.13 in early trading even though net revenue was up 35 per cent at $2.1 billion, reflecting strong growth across all operating segments.
Net profit after tax (NPAT) rose further still by 43.1 per cent to hit $140 million, and much of these benefits will be passed on to shareholders who will get an extra 35.7 per cent in their final dividend payments.
"These results have been driven by the organic growth we have achieved in revenue, earnings and margins, in addition to the synergies achieved so far from the acquisition of Toxfree," says managing director Vik Bansal in reference to the business acquired for $671 million in 2018.
"Margins have expanded and the integration of the Toxfree businesses is progressing as planned and we remain confident of delivering the $35 million of annual synergies from the acquisition."
The company noted net underlying adjustments totalled $16.8 million after tax including costs relating to the Toxfree acquisition and integration.
Cleanaway also explained the China National Sword policy, a strict regulation on waste imports, was leading to increased costs of sorting. This is being passed on to Municipal and Commercial customers progressively, while volatility in the commodity supply chain and pricing continues.
"The strategies that we have implemented in all our businesses over the past four years and the performance culture that has been fostered throughout the organisation are the major drivers of our success," says Bansal.
"The development of our prized infrastructure assets as part of Footprint 2025 continued. During the year we completed construction of post collection facilities in Sydney and Perth, an organics facility in Melbourne and upgraded our soil treatment facility in Sydney.
"Numerous strategic initiatives which we have been implementing across the Company continue to strengthen our position as the leading waste management company in Australia."
Commenting on the challenges facing recycling in Australia, Bansal adds Cleanaway's mission is to make a sustainable future possible.
"As part of this we need to work towards developing a circular economy in Australia," he says.
"This will require changing the way products are designed, produced, sold and used to minimise waste and reduce environmental impact.
"A circular economy is impossible without a well-functioning waste management industry, underpinned by first class infrastructure, credible and high quality operators, robust government policies and initiatives and an educated community."Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
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